What is an Online Marketplace and How Does it Work?

The power of eCommerce has changed how we work, shop and live across the world Globe. With the combination of fast and convenient delivery, competitive prices and a more diverse range of products becoming available. It is now more than ever even easier for consumers to make a purchase at any time.

However, it is the online marketplace that has made the biggest impact across the overall eCommerce industry. Research has shown that marketplaces have grown twice the rate when compared to overall eCommerce. In addition, the online marketplace accounts for two-thirds of global eCommerce. This growth over the past couple of years has been fueled by consumers increased consumption on the marketplace.

So how exactly does an online marketplace work and why have they become so popular? In this blog, we will guide you through the basic concepts and highlight some examples of the world’s leading and unique marketplaces.

What is an online marketplace?

An online marketplace brings together inventory from multiple sellers all to one place. This differs to traditional eCommerce sites that will sell products from a single company. With an online marketplace there are multiple participants who are responsible for different parts of the process.For example, there is a marketplace operator who is responsible for the hosting and management of the marketplace. Then you have your third-party vendors who are looking to sell their products and services through the platform. There are also partners that are in charge of ensuring the marketplace runs smoothly,these marketplace partners will provide tools to keep the platform functioning.

How does an online marketplace work?

In an online marketplace, items are not sold directly by the marketplace operator. Instead, the items that are placed to be sold will come from third-party sellers. It is the marketplace responsibility to manage the aesthetics,feel and customer experience of the site.

When a customer makes a purchase from a third-party seller through the marketplace. It is the seller who fulfills the order and ships the item directly to the customer. In exchange for offering the seller a new channel for growth, the operator earns a commission on each sale. As a marketplace operator, you can offer significantly more products without the need for securing storage facilities or to take on the additional associated risks of shipping the items. Also, buyers can access a wider range of products at more affordable prices. As you can see, the online marketplace offers a benefit to all who is involved, from operators to sellers and buyers.

What is an example of an online marketplace?

There is not a ‘one size fits all’ marketplace as they can come in many different shapes and sizes. The two largest and most well-known marketplaces in the world are Ali Express and Amazon Marketplace.

Ali Express is a China-based marketplace that allows consumers in more than 200 countries and regions to buy goods at wholesale prices. The Ali Express marketplace is available in multiple languages and serves an estimated 150 million global customers on an annual basis.

Amazon Marketplace allows third-party sellers to market their products alongside Amazon’s own range of products. Amazon partners with more than 1.9 million sellers to support its global online marketplace, and marketplace sales now comprise 58% of the company’s total sales figures.

Today, marketplaces are growing at a very fast pace. If you believe you’re ready to start your own marketplace, the next step is to choose the platform that will help you build your business.

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From Fashion to Real Estate to Art and Pharmaceuticals Marketcube enables over 1500 companies worldwide to run multi-seller marketplaces at scale.

Get started and enjoy 14-days free trial to experience its advanced features in real-time and build an online store with www.MarketCube.io!

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